How to invest in golden visa properties - Recommendations and alternatives

Investment Options for the golden visa in Portugal

1. The 500k option

 

Requirements: You have to invest a total 500 TSD EUR in Portugal regardless where and how many properties you buy.

 

Recommended real estate types: There are four recommended options to invest the money in real estate. If you are intested in an optimal return of investment you should buy 2 apartments in the center of Porto or Lisbon for touristic renting or buy 3-4 apartments in Porto or Lisbon for longterm renting. If you would like to have a good return of investment and maybe would like to move to Portugal in the future you should buy a larger apartment in the center of Porto and Lisbon for touristic renting  or buy a bigger house at the silber coast or the Algrave and rent it to tourists. You can also buy land (only) in the 500k option. 

 

Evaluation: The 500k option is the savest in terms of the golden visa approval and also the option with the best return of investment perspective. Reselling in the cities is much easier and the markets grow better than other areas. Because of the high growth rates and the restrictions for touristic renting in Lisbon, Porto is currently the better choice to invest. Touristic properties can always be rented with good returns to the longterm market. 


2. The 350k option

 

Requirements: You have to buy a property in Portugal that has more than 30 years and that needs to be renovated. The renovation costs will be considered when applying for the golden visa program. So the 350 TSD EUR will be the sum of the property costs and the renovation costs. Instead of the 30 years can can buy a property that is located in a regeneration area. Due to the more complicated definition the house age is a far more recommendable option. The renovation have to be at least 20% of the cost of the property. So if the house costs 300 TSD EUR the renovations have to costs at least 60 TSD EUR.

 

Recommended real estate types: There are two recommended types of properties for this option. Either you buy an apartment to renovate in the center of Porto or Lisbon and rent it to tourists or you buy a smaller vacation house to renovate in the Algarve or the silver coast.

 

Evaluation: The returns of renting will be good but not as high as in the 500k option with several properties because you have to invest more in one property. The option is still reasonable because you can buy a good property in the best areas in Portugal and usually the property should gain significantly value through the renovations. Such projects need to be approved by SEF as qualifying for the reduced investment amount and it is critical to ensure the right project and legal advice is obtained before embarking on such investment


3. The 280k option

 

Requirements: You have to buy a property in Portugal that has more than 30 years and that needs to be renovated. The renovation costs will be considdered when applying for the golden visa program. So the 280 TSD EUR will be the sum of the property costs and the renovation costs. Instead of the 30 years can can buy a property that is located in a regeneration area. Due to the more complicated definition the house age is a far more recommendable option. The property has to be located in a low-density are in Portugal.

 

Recommended real estate types: There are two recommendes types of properties for this option. There a good vacation properties in the national parks especially in Gerês. So you buy a vacation property, renovate it and rent it to tourists with good to moderate income perspectives. The second option is to buy agricultural properties with a house to renovate. This options is valid for land that have wine, olives or especial nuts like almonds or cork.

 

Evaluation: The cheapest option is reasonable with moderate return of investments. The low-density areas make reselling more complicated. The application process is  also more complex. Such projects need to be approved by SEF as qualifying for the reduced investment amount and it is critical to ensure the right project and legal advice is obtained before embarking on such investment


4. The 400k option

 

Requirements: You have to invest 400 TSD EUR in one or more properties in a low density-area in Portugal.

 

Recommended real estate types: The best properties for this option are bigger agricultural land with housings or touristic complexes like camping parks or small hotels.

 

Evaluation: This option is the least recommended option unless you are specifically interested in farming or larger touristic activities in the interior of Portugal. However the application is much easier than in the option 280k or 350k.


Golden visa properties in Portugal - Types of properties

Touristic Rental ( Alojamento Local)

In contrast to other European countries, tourism and the provision of housing enjoy a positive reputation in Portugal. Accordingly this is also promoted by the municipalities. As a private person you can very easily register a small business for the rental and apply for the nedded licenses. This usually takes about 2 days.

 

From the investing point of view, apartments in the two major cities of Porto and Lisbon, but also in the classic holiday regions such as the Algarve or Alentejo, are particularly suitable. For apartments in cities there are clear requirements for successful letting. Appropriate apartments must be centrally located with access to the subway. In addition, it must be a historic and renovated building in very good condition.

 

Established apartments generate an average of 25-35 TSD EUR per year. The management of the apartment is taken over by professional administrators which manage of all important tasks of the rental. These are remunerated with 20-30% of your turnover. After taxes the landlord remains with about 65% of their turnover as profit. Corresponding properties are around 250.000 EUR as minimum  investment.

RENTING OF COMMERCIAL properties

Commercial properties had a rather weak development in the recent years. The purchase costs for good locations are therefore around 1000 EUR per square meter. Nevertheless the market is interesting as the conversion of commercial space to official living space has become much easier due to the lack of housing. This will soon lead to a sharp increase in conversions and thus in a higher demand für comercial places.

 

In addition, commercial real estate such as a shops is interesting because you can already acquire the appropriate properties with fairly low budgets. Smaller stores cost around 35.000 EUR in the big cities. The gross return for related properties is around 10%, which is a solid return compared to more expensive investment opportunities. In addition, the commercial space can be rented in the long term and has no high renovation costs.

Long term renting

Similar to other European countries there is a very strong lack of housing in urban areas in Portugal. The rate of privatley owned properties used to be 95%. In recent years, the market has developed into a strong rental market. Particularly in demand are smaller apartments in classic residential buildings which are not located in the center but in connection with the inner cities.

 

The entry prices for 2-3 bedroom apartments are around 150 TSD EUR and are therefore much more affordable than in other major European cities. The rents are usually at 8-11 euros per square meter. With the investment of 300 TSD EUR one comes to a gross rent of approx. 1500 EUR per month.

HOTELs IN PORTUGAL

Portugal is a classic holiday destination with a strong increase in demand from foreign tourists. The market for hotels and the supply of hotel real estate is correspondingly well developed. Objects with 10-20 beds can already be purchased with  400.000 EUR. Smaller objects can also be purchased much cheaper. Many investors focus less on a traditional main building but on the construction of mobile units through which the capacity can be successively expanded.

 

In addition to the efficient management of the hotel and the location the underlying concept behind capital investment is most decisive. There are a lot of classic hotels in Portugal. In order to prevail on the market, it is therefore necessary to occupy a niche or a strong feature in the market. This should already be considered when searching for the right property. For smaller budgets the construction of a hostel in the big cities or a pilgrim hostel in the north of Portugal is suitable.

Agricultural land with houses

Portugal has a long tradition in agriculture and is well known for its wine and olive oil production. There exist also many smaller markets with higher margins like cork trees or nuts like almonds that have stable markets. General fruits like oranges or all kind of vegetables are not recommendable because of the strong competition in Europe especially from Spain.

 

Farm land in Portugal is usually less expensive because the plots are located more in the interior parts of Portugal. This makes also the acquisition of houses much more cheaper as they are required for the golden visa approval.